LONDON (Reuters) - Oil hit four-year lows around $70 a barrel on Thursday and commodity currencies were sent tumbling, as OPEC resisted the temptation to cut back production following the more than 30 percent plunge in prices since June.
Asked whether the oil producer group, which provides around a third of world supply, had decided not to reduce production, Saudi Arabian Oil Minister Ali al-Naimi told reporters: "That is right."
The meeting had lasted over five hours and as the decision emerged both Brent and U.S. crude prices were sent sliding as traders saw it as sign that OPEC members were effectively now in price war with each other.
Brent dropped to $71.58 and U.S. crude sank to $68.20 a barrel as both headed for $5 drops on the day, their biggest falls since May 2011. [O/R]
"Oil prices are now completely in the hands of the market," Dominic Chirichella, director of New York-based Energy Management Institute, told Reuters Global Oil Forum.
Europe's stock markets extended their gains on the day to 0.25 percent as the prospect of cheaper energy costs for both firms and strapped consumers added to Wednesday's signals from the European Central Bank that it is edging closer to government bond buying.
The case for ECB action had been underlined earlier as Spain and Germany both reported weaker-than-expected inflation figures. It points to another decline in the overall euro zone reading when it is published on Friday.
Lending to euro zone households and companies also fell again.
Speaking in Finland, ECB head Mario Draghi said the euro zone needs a "comprehensive strategy" including reforms by governments to get it back on track. Last week, Draghi in effect backed U.S.-style quantitative easing.
The comments and the data lowered the euro to $1.2463 and triggered a new set of record-low bond yields for the euro zone's biggest economies, with France's 10-year yields dropping below 1 percent for the first time.
Most market action, however, centered on the slide in oil.
Oil-rich Norway's crown hit a three-week trough of 8.6530 crowns per euro, Russia's rouble took another dive and Nigeria's naira continued to fall despite an 8 percent devaluation on Tuesday.
The huge slump in oil prices since June had made OPEC's meeting its most closely watched in decades. One member of the cartel told Reuters it will next meet in June.
Besides pushing down inflation in Europe, already close to deflation, the fall in prices is also hurting the economies, currencies and financial markets of many producer countries.
Ehsan Ul-Haq, a senior oil market consultant at KBC Energy Economics, in Vienna for the OPEC meeting, said he expected oil prices to now stay under $80 a barrel for the foreseeable future with a chance they could go below $70.
While the plunge in prices is bad for oil producing countries, it is generally viewed as a positive for global growth as it makes energy cheaper giving consumers more money to spend and reducing costs for firms.
Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.3 percent. Shanghai shares hit a three-year high, extending a rally that began after China cut interest rates last week. They are up 8.2 percent so far this month.
"The rate cut clearly showed the Chinese authorities are very much keen to support the economy. So even though Chinese economic data has been pretty weak, investors are convinced that there will be no hard landing," said Naoki Tashiro, the president of TS China Research.
Japan's Nikkei shed 0.8 percent as the yen recovered some ground against the dollar. The index has gained 5.1 percent so far this month, becoming the second-best performing market in the region after China.
Though trading was lighter than usual due to the Thanksgiving holiday in the United States, the dollar crept up as it fetched 117.54 yen, off last week's seven-year high of 118.98 yen, but still up more broadly.
It also saw gold, which is priced in dollars, dip for a second session as it held below $1,200 an ounce.
Outflows resumed from the top bullion exchange-traded fund, while a referendum in Switzerland on Sunday also kept the market cautious: a "yes" vote would force the Swiss central bank to buy about 1,500 tonnes of gold in coming years, analysts said.
(Addtional reporting by Hideyuki Sano in Tokyo; Editing by Andrew Roche)
Well, if it was a speculative bubble then we won't see $100 oil any time in the near future unless the Arabs cut production. And I don't see that happening. I think we'll see $35 oil before its over and it may sit there a while. That for all intents an purposes will kill the shale drilling for the far see able future.
Jihadist projects are funded largely through Saudi Arabia and Iran, two OPEC nations. The Taliban is a Saudi oil-money project, for example. So is the Muslim Brotherhood and the OIC. Hezbollah is an Iranian oil-money project.
I think the problem for American companies - especially the minor ones - is the instant gratification that Wall Street expects. There is no staying power there when your shareholders bail.
But what are we going to do about it? Drill our way out. U.S. energy independence from Arab oil, largely driven by technological innovation through hydraulic fracturing, may be the biggest strategic game-changer in the global balance of power since World War II.
Fracking lets us ditch Saudi oil to use our own:
That was posted back in September. That was light years ago. Again, the problem as I see it: Wall Street is not going to look at national security or anything other than profits and stock appreciation. A company can have the best of intentions and not get funding or keep funding except those subsidized by the Government. On the other hand the oil will still be here in the shale. Its just going to take time to restart the drilling but the "force" the Saudis have will be remembered.
Big tax breaks for duel fuel cars, trucks and fueling stations could probably bring Opec to its knees in a couple of years. Natural Gas is the way to go but the folks will not buy vehicles that won't burn gasoline. If they have a choice of fuel and can write it off they will buy them.
CNG is unlikely to fuel many light duty, private vehicles until technology can make a tank in some shape other than a cylinder. The most common private vehicle that is not a conversion is the Honda Civic. The CNG tank takes up half the trunk.
I would think that you could start with 1/2 ton pickups and larger just to show everyone that it would work.
This tank would take up a lot of space, even in a standard truck bed.
They do come in different sizes but even the smallest 5gge are good size.
What To Know About CNG Car Cylinders
The most expensive single component of your CNG car conversion will most likely be the high-pressure CNG fuel tank, also known as the "cylinder". We do not recommend trying to save a buck and getting a used one.
CNG Cylinders Aren't Just Air Tanks
Around the world there are many different types of cylinder requirements and certifications. You can learn more details about the CNG car cylinder standards here. Cylinders are used all around the world. The most common pressure rating in the world (on car cylinders) is 3000 psi (200 Bar pressure) (pounds per square inch). For whatever reason, the American standard for pressure rating on car CNG cylinders is 3600 psi (250 bar pressure). The filling stations in the USA are being built to accomodate these higher gas pressures. It is very important to know the pressure rating of your cylinder. The higher the pressure, the more CNG you can hold and the longer you can drive.
The cylinder usually has between 5 and 15 gge (gasoline gallon equivalent) and the 15gge tank can easily be about 19 inches diameter and 60 inches in length. One "gge" of CNG will get the same mileage as a gallon of gasoline, assuming your CNG conversion was installed correctly.
Remember, you will most likely install it inside your trunk or in the bed of your truck. The cylinder will have an expiration date and one will usually last over 15 years, although visual inspections are required every 36,000 miles or 3 years, whichever comes first. With the proper installation using heavy duty mounting straps you can rest assured your cylinder is perfectly safe to drive around. Again, we enourage you to learn more about the various CNG car cylinder standards.
There is plenty of room under my 1/2 ton GMC for a larger tank than 19 X 60. A lot of ladies I know would rather drive a Surburban than a Prius.Their only problem is the cost of fuel at the pump not MPG. How many kids and their sports gear can you get in a Prius?
The goal of research for CNG vehicle fuel storage is to find a way to contain required pressures in some shape other than a cylinder. There exists spaces in all light duty vehicles including compact cars that would accommodate multiple fuel tanks in a shape flatter than a cylinder.
I could fit a cylinder in the trunk of my Camry but I can't loose a third to a half of that storage space without compromising how I use the car. Those that don't mind giving up the required space in a larger vehicle have the option.